LOS ANGELES (Reuters) - Kaiser Permanente, the biggest U.S.
health maintenance organization, said it is using Gilead
Sciences' new hepatitis C drug, Sovaldi, even though its $84,000
treatment price is "outrageous."

The medication is widely viewed as a breakthrough that can
cure a majority of hepatitis C patients, often within 12 weeks.
Analysts project 2017 sales of $9.1 billion, according to
Thomson Reuters Pharma.

But Gilead has come under fire, from insurers and Congress,
for Sovaldi's $1,000-a-pill price at a time when U.S. healthcare
spending is under scrutiny and President Barack Obama's
Affordable Care Act aims to make health coverage accessible to
everyone.

The company says Sovaldi should create huge savings for the
healthcare system over time by preventing complications from
liver disease and transplants, but declined requests for
evidence to back up those claims. A Gilead executive told
Reuters last week that it had an agreement to discount the drug
for the Kaiser network, based on their recognition of the
long-term benefits.

In an interview, Kaiser officials disputed that view.
Kaiser is using Sovaldi "not because we see this as a
high-value, cost-effective approach," said Dr. Sharon Levine,
associate director of the Permanente Medical Group. "It's
because this is a therapy that represents a substantial
improvement over existing therapies ... It's an outrageous price
for a therapy that has huge public health implications."

She called Kaiser's discount on Sovaldi "modest" and said
state Medicaid programs and private health insurers "are going
to have to make very serious tradeoffs just based on a single
manufacturer's decision on pricing a drug because they can."

Gilead officials declined to comment.

Hepatitis C, estimated to infect about 3.2 million
Americans, is a blood-borne virus that can cause severe liver
damage.

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Democratic lawmakers in the House of Representatives, led by
California's Henry Waxman, have asked Gilead to explain
Sovaldi's pricing. The company said it met with committee staff
on Monday.

The public call to Gilead from Congress has sent shock waves
through the biotech investment community, raising concerns that
other leading drugmakers could face pressure on pricing new
medicines. Over the past month the Nasdaq Biotechnology Index
has fallen more than 8 percent.

Insurers and state officials running the Medicaid health
program for the poor fear a multibillion-dollar tab from Sovaldi
alone.

Investment bank Leerink Partners estimates the drug's cost
could trim as much as 10 percent from the earnings of publicly
traded health insurers.

Kaiser, a nonprofit, said Sovaldi will be a material portion
of its drug budget - a cost ultimately born by members and
employers who pay insurance premiums.

"It comes back to the question of who benefits at a time
when there is enormous pressure to ensure that the cost of
healthcare, the cost of providing access to cures doesn't
bankrupt all of the rest of the investments that the country
needs to make," Levine said.